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United States v. Bond

January 20, 2009

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
ILLYA BOND, AKA FRANK AKBERY, DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Central District of California Percy Anderson, District Judge, Presiding. D.C. No. CR-05-00660-PA.

The opinion of the court was delivered by: O'scannlain, Circuit Judge

FOR PUBLICATION

OPINION

Argued and Submitted June 5, 2008 -- Pasadena, California

Before: David R. Thompson, Diarmuid F. O'Scannlain, and Richard C. Tallman, Circuit Judges.

We must decide whether the government withheld Brady information from a defendant in a wire fraud prosecution arising out of an electric power sales scheme in the deregulated California market.*fn1

I.

In 1998, California deregulated its electricity industry, which, at the time, consisted of three major companies: Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric. Although these utilities continued to transmit and to distribute electricity, after deregulation California customers could choose to buy their power from the regional supplier, or they could select a different electric service provider ("ESP").

A.

Attracted by the business opportunity presented by deregulation, Defendant-Appellant Bond bought an inactive shell company in 1998 that had previously been involved in providing electricity and formed PowerSource Corporation ("PowerSource"). Bond was its chief executive officer, and marketed the company as an ESP that would provide residential and commercial electricity throughout the state. Power-Source did not operate its own power stations. Rather, the company purchased electricity from other sources and then sold it to its customers at a slight mark-up.

PowerSource divided California into 39 districts in which it would sell power. It planned to have each district financed by a partnership that would contribute capital in return for a percentage of PowerSource's profits from that district. Power-Source hired Power Capital Funding Group ("PowerCapFunding") to sell the partnerships. PowerCap-Funding was run by Ronald Johnson and James Miles.

PowerCapFunding, in turn, hired various telemarketing "boiler rooms" to sell units in the partnerships to investors. The boiler rooms (euphemistically called "independent selling organizations") then called individuals, in hope that they would be interested in buying into one of the partnerships. Interested individuals were sent further information by mail.

The telemarketing entities sold partnership units from late 1998 through summer 2001. Each partnership unit cost $10,000, and the investment plan anticipated that each partnership would encompass 60 partnership units. Once sixty units had been sold, the partnership was closed and another partnership was opened.

The financing scheme was a scam. Numerous material misrepresentations and omissions were made to the potential investors by the telemarketers and in the printed marketing materials. PowerCapFunding, with input from Bond, created Partnership Memoranda that detailed the purpose and terms of the partnership offering. These memoranda stated that sales commissions on each investment unit would be between 15 and 45 percent. In fact, however, PowerCapFunding retained a 61 percent sales commission. The memoranda also contained misleading biographical information on Bond and other significant PowerSource figures. The memoranda further identified several individuals as serving in ...


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